|Tom Hayes, Tyson president and CEO|
“We’re grateful to everyone who has contributed to the company’s success, and we’re thankful for their time with Tyson Foods,” said Tom Hayes, Tyson’s president and CEO. “These are hard decisions, but I believe our customers and consumers will benefit from our more agile, responsive organization as we grow our business through differentiated capabilities, deliver ongoing financial fitness through continuous improvement and sustain our company and our world for future generations.”
Hayes said the company is implementing its previously announced “Financial Fitness” plans. “We are creating momentum behind our continuous improvement agenda as we know we can be even more efficient operators,” he said. “We are a good partner for growth for our customers and are constantly challenging ourselves to identify opportunities to create value for our consumers, customers and shareowners.”
During a Sept. 6 presentation to analysts at the Barclays Global Consumer Staples Conference, Hayes spelled out the company’s three-pronged approach moving forward, including: growing the business; delivering results; and sustaining the Tyson enterprise.
A cornerstone to the three factors is the company’s financial stability, Hayes said, adding that Tyson must “continually have a focus on being really financially fit,” which includes plans to reduce its cost structure. Tyson is benefiting from the $4.2 billion acquisition of AdvancePierre Foods Holdings Inc. in June by realizing synergies of more than $200 million.
Through a combination of synergies from the AdvancePierre integration and additional eliminations of non-value-added costs, the company expects cumulative net savings of $200 million, $400 million and $600 million over fiscal years 2018, 2019 and 2020, respectively, according to the company release. The Prepared Foods and Chicken segments will be the most impacted by these savings, specifically in the areas of supply chain, procurement and overhead.
The company also announced increased adjusted guidance for fiscal 2017, adjusted guidance for fiscal 2018 and cost savings targets for 2018-2020. Higher anticipated earnings in the Beef segment have led to adjusted earnings guidance for the 2017 fiscal year, which ends Sept. 30, being increased to an adjusted $5.20-5.30 per share, up from $4.95-5.05. Guidance for fiscal 2018 is an adjusted $5.70-5.85 earnings per share, which will be the seventh consecutive year of record adjusted EPS.
In its fiscal fourth quarter earnings report, Tyson Foods plans to report restructuring and other charges of “approximately $140 to $150 million, composed of an approximately $70 million impairment for costs related to in-process software implementations, $45 to $50 million in employee termination costs and $25 to $30 million in contract termination costs.”